The National Health Service Pension Scheme (Additional Voluntary Contributions) Regulations 2000

Regulation 13

SCHEDULE BENEFIT LIMITS

PART 1 INTERPRETATION

1.  Paragraphs 2 to 10 have effect for defining expressions used in this Schedule.

2.  “Adjusted salary” means

A + B,

where—

a

A is the participator’s total taxable earnings for the year in question less any fluctuating emoluments such as bonus payments and payments for overtime; and

b

B is the annual average of the fluctuating emoluments, which shall for these purposes be averaged—

(i)

in a case where such emoluments have been paid for a period of less than 3 years, over the period during which they have been paid; or

(ii)

in any other case, over a period of whole years, not being less than 3 consecutive years, ending on the last day of the year in question.

3.—(1) “Final remuneration” means, subject to sub-paragraphs (2) and (3), the greater of C and D, where—

(a) C is the highest amount of adjusted salary earned by the participator in respect of pensionable service in any year during the period of 5 years ending on the material date; and

(b) D is the annual average of the participator’s adjusted salary in respect of any period of 3 or more consecutive years ending no earlier than 10 years before the material date,

but, in respect of any year other than the one ending on the material date, the adjusted salary shall be taken to have been increased in proportion to any increase in the Index from the end of that year up to the material date.

(2) In respect of the tax year 1987–88 and following tax years, “final remuneration” shall not include any sums chargeable to tax under section 148 of the Taxes Act (payments on retirement or removal from office or employment) or chargeable under Schedule E to Part I of the Taxes Act and arising from the acquisition or disposal of shares, or an interest in shares, or from a right to acquire shares except where the shares or rights which gave rise on or after 17th March 1987 to a tax liability under that Schedule had been acquired before that date.

(3) Where the participator entered pensionable employment on or after 1st June 1989 and final remuneration, calculated under sub-paragraph (1), exceeds the permitted maximum under section 590C of the Taxes Act(1) (conditions for approval of retirement benefit schemes: earnings cap), then for the purposes of calculating the participator’s final remuneration, no account shall be taken of the excess over that amount unless the participator is a person mentioned in regulation C1(3) of the Pension Scheme Regulations (meaning of “pensionable pay” and “final year’s pensionable pay”)(2).

(4) For the purposes of this paragraph, the Secretary of State shall select the years by reference to which the participator’s final remuneration is to be calculated and the years selected shall be those which produce the result most favourable to the participator.

4.  “Material date” means the earlier of—

(a) the participator’s retirement date; and

(b) the date on which the participator ceased to be in pensionable employment.

5.  “Permitted amount” means—

(a) in relation to a retirement pension, the amount determined in accordance with whichever of paragraphs 12 to 17 below is applicable in the case of the participator;

(b) in relation to dependants' pensions, the amount determined in accordance with whichever of paragraph 18(2) and (3) is applicable in the case of the participator; and

(c) in relation to a lump sum on death the amount determined in accordance with paragraph 19(4).

6.—(1) “Retained benefits” means the total of any pensions payable to the participator, in respect of employment before the participator entered pensionable employment, under—

(a) a retirement benefit scheme falling within Chapter I of Part XIV of the Taxes Act (retirement benefit schemes, approval of schemes);

(b) a retirement annuity contract or trust scheme approved under Chapter III of Part XIV of the Taxes Act (retirement annuities);

(c) a personal pension scheme approved under Chapter IV of Part XIV of the Taxes Act (personal pension schemes);

(d) a statutory scheme as defined in section 612(1) of the Taxes Act (other interpretative provisions, and regulations for purposes of this Chapter); or

(e) an approved scheme.

(2) Where the participator joined the NHS Pension Scheme on or after 1st June 1989, retained benefits may be ignored if his salary during his first year of being employed by an employing authority does not exceed one quarter of the permitted maximum under section 590C of the Taxes Act (conditions for approval of retirement benefit schemes: earnings cap).

(3) Where the participator joined the NHS Pension Scheme before 1st June 1989, retained benefits may be ignored if his salary during the year in which he made an election under regulation 3 did not exceed one quarter of the permitted maximum under section 590C of the Taxes Act.

(4) In this paragraph—

(a) “employing authority”(3) has the meaning given to that expression in regulation A2 of the Pension Scheme Regulations (interpretation)(4); and

(b) “pension” includes the actuarial equivalent as an annual pension, as determined by the Board of the Inland Revenue, of any lump sum.

7.  “Tax year” means the 12 months beginning with 6th April in any year.

8.  “Total retirement benefits” means the total of so much of—

(a) the annual rate of the participator’s retirement pension derived from an annuity purchased in accordance with these Regulations;

(b) the annual rate of any pension payable under Part E or regulation L1 of the Pension Scheme Regulations (benefits for members or preserved pension);

(c) the annual rate of any pension payable to the participator under any approved scheme; and

(d) the actuarial equivalent as an annual pension, as determined by the Board of the Inland Revenue, of any retirement lump sum under—

(i) the Pension Scheme Regulations; or

(ii) an approved scheme,

as is attributable to contributions, including any contribution made by the employer, paid while in pensionable employment.

9.  “Total taxable earnings” means all salary, wages, fees and other regular payments made to a participator in respect of pensionable employment which are chargeable to income tax under Schedule D or Schedule E to Part I of the Taxes Act.

10.  “The year in question” means—

(a) in the case of a practitioner—

(i) a 12 month period running from 1st April to 31st March; or

(ii) a 12 month period beginning immediately prior to the practitioner’s date of termination of employment,

whichever is more favourable to the practitioner; or

(b) in any other case, a 12 month period beginning immediately prior to the participator’s date of termination of employment.

PART II RETIREMENT PENSIONS

11.  The annual rate of a participator’s retirement pension derived from an annuity purchased in accordance with these Regulations must not be such as to cause the participator’s total retirement benefits to exceed the permitted amount.

12.—(1) Where the participator becomes entitled to a pension under regulation E1 of the Pension Scheme Regulations (normal retirement pension) on his 60th birthday, the permitted amount is the greater of E and F, where—

(a) E is 1/60th of the participator’s final remuneration multiplied by the number of years of his pensionable service not exceeding 40 years; and

(b) F is the lesser of G and H.

(2) For the purposes of sub-paragraph (1)—

(a) G is—

(i) in the case of a participator who entered pensionable employment before 17th March 1987, such fraction of his final remuneration as is specified in column (2) of the Table below in relation to the number of years of his pensionable service specified in column (1) of that Table—

Table

Column (1)	Column (2)
Years of pensionable service at age 60	Fraction
Not more than 5	1/60th for each year
6	8/60ths
7	16/60ths
8	24/60ths
9	32/60ths
10 or more	40/60ths

• and

(ii) in any other case, is 1/30th of the participator’s final remuneration multiplied by the number of the years of his pensionable service, not exceeding 20 years; and

(b) H is 2/3rds of the participator’s final remuneration less any retained benefits.

13.  Where the participator becomes entitled to a pension under regulation E1 of the Pension Scheme Regulations (normal retirement pension) on a date later than his 60th birthday, the permitted amount is the greatest of J, K and, where applicable, L, where—

(a) J is an amount calculated in accordance with paragraph 12 as at the material date;

(b) K is an amount calculated in accordance with paragraph 12 as at the participator’s 60th birthday increased up to the date of his retirement, in proportion to any increase in the Index during that period; and

(c) L is, in the case of a participator with more than 40 years of pensionable service, 1/60th of the participator’s final remuneration multiplied by the number of years of his pensionable service, not exceeding 45 years and excluding any years before the participator’s 60th birthday in excess of 40.

14.—(1) Where the participator becomes entitled to a pension under regulation L1 of the Pension Scheme Regulations (preserved pension)(5) the permitted amount is—

(a) where the participator first entered pensionable employment before 1st June 1989, the greater of—

where—

(i)

M is 1/60th of the participator’s final remuneration multiplied by the number of the years of his pensionable service, not exceeding 40 years;

(ii)

N is the number of years by reference to which M is calculated;

(iii)

P is the number of years by reference to which M would have been calculated if the participator had continued in pensionable employment until his 60th birthday;

(iv)

Q is the maximum amount calculated in accordance with paragraph 12 if the participator had continued in pensionable employment until he attained the age of 60;

(v)

R is the appropriate increase; and

(b) in any other case, the amount calculated in accordance with paragraph 12(1), (2)(a)(ii) and (2)(b) increased up to the date of his retirement in proportion to any increase in the Index during that period.

(2) For the purpose of sub-paragraph (1)(a)“the appropriate increase” is an increase in the amount in question in proportion to any increase in the Index during the period beginning with the cessation of pensionable employment and ending with the date of payment of the participator’s retirement pension.

15.  In their application to persons who are special class officers for the purposes of regulations R2 (nurses, physiotherapists, midwives and health visitors) and R3 (mental health officers) of the Pension Scheme Regulations, paragraphs 12 and 13 shall have effect subject to the modification that “55th birthday” shall be substituted for “60th birthday”, and “age of 55” shall be substituted for “age of 60”.

16.  If the participator becomes entitled to a pension under regulation E2 of the Pension Scheme Regulations (early retirement pension on grounds of ill health), the permitted amount is that fraction of the participator’s final remuneration, which in accordance with paragraph 12, he could have received had he remained in pensionable employment until his 60th birthday.

17.—(1) If the participator becomes entitled to a pension under regulation E3 (early retirement pension in respect of redundancy), E4 (early retirement pension with employer’s consent) or E5 (early retirement pension with actuarial reduction) of the Pension Scheme Regulations, the permitted amount is—

(a) where the participator first entered pensionable employment before 1st June 1989, the greater of—

• and

(b) in any other case, S.

(2) In sub-paragraph (1) above, M, N, P and Q have the same meaning as in paragraph 14, and S is the amount calculated in accordance with paragraph 12(1), (2)(a)(ii) and (2)(b).

PART III DEPENDANTS' PENSIONS

18.—(1) The annual rate of a dependant’s pension under these Regulations, or where more than one such pension is payable, the total of their annual rates, must not be such as to cause the total of the annual rates of the relevant benefits to exceed the permitted amount.

(2) Where only one dependant’s pension is payable, the relevant benefits are—

(a) that pension; and

(b) any similar pension payable to the dependant under the Pension Scheme Regulations or under a free-standing additional voluntary contributions scheme to which contributions were paid while the participator was in pensionable employment,

and the permitted amount is 2/3rds of the maximum retirement pension.

(3) Subject to sub-paragraph (4), where two or more dependants' pensions are payable, the relevant benefits are—

(a) those pensions; and

(b) any similar pensions payable as mentioned in sub-paragraph (2)(b),

and the permitted amount is the annual rate of the maximum retirement pension.

(4) The relevant benefits payable in respect of any one dependant shall not exceed the permitted amount calculated in accordance with sub-paragraph (2).

(5) Subject to sub-paragraph (6), the maximum retirement pension is the permitted amount calculated in accordance with paragraphs 12 to 17 in relation to the participator, but disregarding any retained benefits.

(6) The maximum retirement pension is to be calculated on the assumption that—

(a) where the participator died in pensionable employment and had not attained the age of 60, he continued in pensionable employment and was in receipt of the same level of salary which he was receiving at the time of his death up to, and retired on, his 60th birthday; and

(b) where the participator died in pensionable employment and had attained the age of 60, he retired on the day before his death.

PART IV LUMP SUMS ON DEATH

19.—(1) The lump sum payable under regulation 11(7) must not be such as to cause the total of the lump sums payable on death to exceed the total realisable value of the investments made by the Secretary of State under regulation 7(1), 8(2) or 9(4) in respect of contributions made by the participator.

(2) The total lump sums payable on death are the total of—

(a) any lump sum death benefit arising pursuant to an election under regulation 3(1)(b) or (6) or 5(2)(a);

(b) any lump sum payable under regulation 11(7); and

(c) any lump sum death benefits which in total exceed £2,500 and which are payable under relevant schemes.

(3) The relevant schemes are—

(a) approved schemes;

(b) schemes approved under Chapter IV of Part XIV of the Taxes Act (personal pension schemes);

(c) free-standing additional voluntary contribution schemes;

(d) retirement annuity contracts approved under Chapter III of Part XIV of the Taxes Act;

(e) the Scheme constituted by the Pension Scheme Regulations; and

(f) relevant statutory schemes as defined in section 611A(6) of the Taxes Act.

(4) The permitted amount for the purposes of regulations 4(5) and 12(2) is £5,000 or, if greater, 4 times the participator’s remuneration.

(5) The participator’s remuneration is the greatest of T, U and V, where—

(a) T would have been the amount of the participator’s final remuneration if the date of his death had been the material date;

(b) U is the highest amount of the participator’s adjusted salary applicable under paragraph (3) for the purpose of calculating T, and

(c) V is the participator’s total taxable earnings during any period of 12 months ending on a date not more than 3 years immediately before his death, increased in proportion to any increase in the Index during the period beginning with that date and ending on the material date.

(1)

Section 590C was inserted by paragraph 4 of Schedule 6 to the Finance Act 1989.

(2)

Regulation C1 was amended by S.I. 1997/80.

(3)

Section 612 was amended by sections 103(2), 258 of, and paragraph 12 of Part V of Schedule 26 to, the Finance Act 1994 (c. 9).

(4)

The definition of “employing authority” was amended by S.I. 1997/1888, 1998/666 and 2000/605.

(5)

Regulation L1 was amended by S.I. 2000/605.

(6)

Section 611A was inserted by paragraph 15 of Schedule 6 to the Finance Act 1989.